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Hiring Rate Will Hit Three-Year High in Manufacturing, Services

While it’s certainly not going to be as hot as the summer temperatures, the hiring rate in July is set to increase significantly in the service sector and will rise slightly in manufacturing compared with a year ago, according to the latest Leading Indicators of National Employment (LINE) survey released July 3, 2013, by the Society for Human Resource Management (SHRM).

The LINE Employment Report examines four key areas: employers’ hiring expectations, job vacancies, difficulty in recruiting top-level talent and new-hire compensation. It is based on a monthly survey of private-sector human resource professionals at more than 500 manufacturing and 500 service-sector companies.

Employment Expectations

Manufacturing

Service

The hiring rate will increase in July 2013 in both manufacturing and services compared with July 2012.

+1.7

+18.4

Recruiting Difficulty

In June 2013, recruiting difficulty fell slightly in manufacturing and rose modestly in services compared with June 2012.

-1.2

+10.0

New-Hire Compensation

In June 2013, the rate of increase for new-hire compensation dropped slightly in both sectors compared with a year ago.

-4.0

-2.6

Source: SHRM Leading Indicators of National Employment (LINE), shrm.org/line

Employment Expectations

For the 12th consecutive month, the hiring rate for July will rise in services compared with a year ago, LINE data show. Hiring also will rise marginally in the manufacturing sector compared with last year.

A net of 42.5 percent of service-sector companies will expand payrolls in July, increasing the sector’s hiring index by 18.4 points compared with a year ago. A net of 38.4 percent of manufacturers will add jobs in July, increasing the sector’s hiring index by 1.7 points from last year.

“This month we are again seeing HR’s hiring expectations rise slightly in manufacturing and fairly significantly in the service sector compared with a year ago,” said Jennifer Schramm, GPHR, SHRM’s manager of workplace trends and forecasting. “These are the strongest increases we’ve seen for July since 2010.”

LINE data compare favorably with reports from the U.S. Bureau of Labor Statistics (BLS). Several service industries, for example, have posted sizable job gains as of late, according to BLS data.

Vacant Positions: Exempt, Nonexempt

Salaried and hourly job openings increased in both sectors in June 2013 compared with June 2012, LINE data show.

In the manufacturing sector, a net total of 21.1 percent of respondents reported increases in exempt vacancies in June 2013, representing a 2-point increase from June 2012. A net total of 24.9 percent of manufacturing respondents reported that nonexempt vacancies also increased in June, representing a 6.7-point increase from a year earlier.

In the service sector, a net total of 21.1 percent of respondents reported increases in exempt vacancies in June, a 14.7-point increase from June 2012 and a four-year high for service-sector exempt vacancies in the month of June. For nonexempt service positions, a net total of 20.7 percent of respondents reported more vacancies in June, representing a 13-point increase from the previous June.

Recruiting Difficulty

LINE’s recruiting-difficulty index measures how hard it is for firms to recruit candidates to fill the positions of greatest strategic importance to their companies.

Recruiting difficulty followed a similar, though more muted, pattern as employment expectations, said Schramm. June recruiting difficulty was pretty much unchanged in manufacturing.A net of 13.8 percent of manufacturing respondents had a tougher time with recruiting in June; this is a decline of 1.2 points from June 2012. A net of 13 percent of service-sector HR professionals had more difficulty recruiting in June, an increase of 10 points from a year ago.

“Given the increases in hiring expectations in services, it is not surprising that recruiting difficulty in services was up compared with a year ago,” Schramm observed.

Other recent SHRM findings indicate that many HR professionals are finding talent management and recruitment challenging. In a March 2013 SHRM survey 66 percent of the responding organizations that said they are currently hiring indicated they are having a difficult time recruiting, up from 52 percent in 2011. And a November 2012 SHRM poll revealed that 34 percent of respondents said “remaining competitive in the talent marketplace” would be a top challenge during the next 10 years.

New-Hire Compensation

In June, the rate of increase for new-hire compensation fell in both sectors.

In the manufacturing sector, a net total of 7.7 percent of respondents reported increasing new-hire compensation in June—a 4-point drop from June 2012. In the service sector, a net total of 5.5 percent of companies bumped up new-hire compensation in June, representing a 2.6-point decrease from a year ago.

“While hiring expectations may be up and recruiting candidates for some key jobs is quite challenging, this is not readily translating into an overall increase in the new-hire compensation packages being offered,” said Schramm.

Overall, the index’s data show that most organizations are still keeping new-hire compensation rates flat. This is consistent with recent BLS findings on real average hourly earnings, which rose just 0.5 percent in May 2013 compared with May 2012.